The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services (AFS) licence of Sydney-based managed discretionary account (MDA) provider, Jade Capital Partners Pty Ltd and banned one of its directors, James Clinnick.
The ASIC announcement said the license cancellation had taken effect on 11 January and that Clinnick would be banned for a period of four years.
The regulator said it had taken the action because an ASIC surveillance uncovered widespread non-compliance with financial services laws at Jade Capital and that, as a result, ASIC concluded that Jade Capital had failed to provide financial services efficiently, honestly and fairly, and Mr Clinnick was involved in Jade Capital's breach of a financial services law by engaging in misleading and deceptive conduct.
It said Jade Capital contravened financial services laws by advertising misleading returns, fees and costs, performance history and results relating to MDA strategies whilst also failing to maintain the competence to provide financial services and to ensure its representative was adequately trained and competent.
ASIC said Jade Capital advertised returns for its MDA strategies on its website and in a video presentation, which included 'back tested' return with the regulator finding the advertised MDA returns were likely to mislead potential investors into believing the returns were based on actual returns when this was not the case.
ASIC also found the advertised fees and costs could lead investors to believe Jade Capital would only receive income if an investor made profits when, in fact, Jade Capital received transaction fees from trading on behalf of clients under an MDA arrangement. Furthermore, claims about performance in the video presentation were also likely to mislead investors into thinking the MDA strategies managed by Jade Capital had been generating consistently good results.
Commenting on the license cancellation and banning, ASIC Commissioner Danielle Press said licensees had to comply with financial services laws or risk losing their licence.
“Licensees must not mislead consumers when marketing their services. ASIC will not hesitate to take action when licensees or their representatives don’t comply with the law,” she said. “I also advise all consumers considering MDAs to evaluate the risks and benefits of an MDA. Consumers should ensure they have a good understanding of all the fees and charges, and carefully consider the scope of authority they are giving to their adviser.”